In the Netherlands you sometimes hear voices that say that the (Dutch) Corporate Governance Code is basically useless. What is behind that? The Dutch Code has a different scope of application than that of Curacao, St. Maarten and Aruba. In the Netherlands the Code only applies to listed companies (approximately 150). In the Dutch Caribbean the Code only applies to government-related entities (measured throughout the Dutch Caribbean this is estimated to be about 300). In the Netherlands the Code is, despite its limited scope of application, still applied by almost the entire larger business community. In factual terms there is a complete effect. Then why do some people still feel the Code is useless in the Netherlands?
This can be attributed to the fact that listed companies are often international companies. They are often bound by many more Corporate Governance Codes than just the Dutch Code. The Dutch Code attaches considerable importance to continuity of the company and to a balanced consideration of the interests of all stakeholders. Anglo-American legislation and codes attach more importance to stockholder value. This can sometimes prejudice employment, sustainability and corporate citizenship. These are all matters that are actually of eminent importance in the Dutch Code. Foreign companies that are (also) listed on the Dutch stock exchange can, if it were, ‘shop’ between applicable codes due to mergers, takeovers and the like. If a Dutch listed company emphasizes sustainability and continuity of the company in its annual report then this can well be different the following year due to a takeover. The same business is then only interested in the enhancement of the stockholder value. Even if this is the case then, in my opinion, the use of the Dutch Code is not reduced. After all, the high degree of other companies that follow the Code in the Netherlands – voluntarily even – shows that the principles embedded in the Code are experienced by society as correct and necessary.
Besides, you can also see the useful effect of a code here in the Dutch Caribbean, despite the fact that it is, barring in the financial sector, barely used by the business community of Curacao. Here, it has a different effect. On Curacao and St. Maarten there has for a number of years been considerably less chaos in the supervisory boards of government-related entities in case of a change of government than on Aruba. This can be attributed to the fact that collective dismissal of the supervisory board, exclusively on account of the fact that it would have a certain political color, is no longer possible. Every intended dismissal is, in pursuance of the National Ordinance Corporate Governance, subject to the prior opinion of the Corporate Governance Advisor. Aruba does not have this system. Nor does Aruba dispose of a properly functioning Corporate Governance Code. On Aruba supervisory directors are simply dismissed as soon as a new government has been formed. You then need to address the court in order to try to prevent this. Fortunately, this is no longer necessary in the other countries in the Caribbean part of the Kingdom. Namely, the system where everybody is sent home after every change of government is disastrous for the continuity of the company. The positive effect of the governance legislation can therefore certainly also be felt here, at least on Curacao and St. Maarten. Overall assessment: useful!
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Then why do some people still feel the Code is useless in the Netherlands?